Economics:The 150th anniversary of the London Underground is a timely reminder of the contribution our Victorian ancestors still make to our lives. In 1858 the Thames river was an open sewer and abnormal weather conditions produced what became known as "the great stink". The foul smell made much of London virtually uninhabitable. The Houses of Parliament, situated on the river bank, were particularly affected.
The cry went up that something had to be done. Over the next decade, an extensive network of sewers was built under the supervision of the engineer, Joseph Bazalgette.
The project benefited not just the nostrils of Londoners but the face of London itself; most strikingly through the creation of embankments on each side of the Thames.
The northern embankment is one of London’s major traffic arteries and supports a series of gardens. Beneath is an underground railway line and the city’s principal sewer. On the South Bank, a walkway from County Hall to Tower Bridge atop the sewer offers one of the world’s most spectacular riverscapes.
Long-serving sewers
These sewers have met the needs of the capital for 150 years. Only recently has their capacity come under pressure and work will soon begin on a new Thames tunnel, deep underground. The technology needed for such construction did not exist in Bazalgette’s day: 20 years earlier, the Brunels had built the first river tunnel under the Thames, barely a quarter of a mile long, at ruinous cost in financial and human terms.
Yet if Bazalgette’s scheme had been subjected to current appraisal procedures, it is hard to imagine that it would have been built. Although the embankments are an amenity of enormous value to London, their construction had many negative consequences.
The once-magnificent river entrance to Somerset House, for example, now sits forlorn behind a main road. The gardens of the Inns of Court no longer give on to the Thames. Procedural objections would be innumerable and the delays interminable.
The project would also have been subject to the criteria laid down in the modern treasury’s appraisal process, which requires a careful assessment of benefits over its expected life. Several hundred years I suppose, since the need for sewers seems likely to continue, but these benefits would be discounted at a rate of 3½ per cent a year.
Real estate and stench
The civil servants would have been required to survey the impact of noxious smells on property values.
But the principal issue would have been the consequences for health – they would have got this badly wrong, since Victorian physicians overestimated the ill-effects of miasma from the atmosphere and underestimated the role of bugs you contract from contaminated water.
The statisticians and consultants would have estimated the time saved if hansoms and sedans could make their way to the City along the Embankment rather than through clutter on Fleet Street.
They would have struggled to analyse the likely traffic on the underground railway since none had ever been built.
Their estimates would have been completely wrong and irrelevant anyway. The salient fact is that London could never have become a great business and financial capital if its residents felt an urge to vomit every time they went outdoors.
Economic historian Robert Fogel calculated that the growth of railways in the 19th century contributed only 2.7 per cent to the US gross domestic product, by measuring the savings achieved by using track over the costs of shipping by wagon and barge.
Debate continues as to whether the smallness of the number demonstrates that railways were not important to US economic development, or just the silliness of attempting that type of calculation at all; I incline towards the latter view.
Opportunity cost
The demand for such analysis is the result of justified concern that advocates of grand projects pay insufficient attention to the opportunity costs of their schemes.
It is perfectly proper to demand a detailed rationale, and quantification of that rationale when quantification is possible. Specific quantification is often bogus, however, and beside the point; there would have been no modern world without railways or with the great stink.
The key issue is whether we as a generation leave a better city, or a better environment, than we found.
Bazalgette and his contemporaries did. I am less certain that we will.
– (Copyright The Financial Times Limited 2013)
